AOL takes an equity stake in ad manager AdForce

Looking to grab a leadership role in ad management and serving, AdForce this week will announce deals with Net heavyweights America Online, Netscape Communications Corp.'s Netcenter and GeoCities.

AdForce, formerly known as Imgis, will get financing from AOL, which is taking an equity stake in the software company and has acquired a worldwide license to the centralized ad management service.

AOL REPS SELL FOR ADFORCE SITES

AOL has its own extensive proprietary ad serving and measurement system that it will continue to use; AOL representatives said, however, it may use the AdForce serving technology in the future. AOL sales reps will also begin to sell ads for some of AdForce's sites.

Evan Neufeld, senior analyst with Jupiter Communications, said, "Internally, AOL is really behind the curve when it comes to ad management. In my opinion this is something they should have done months ago. ... From all accounts, [AOL's ad management] stuff is adequate, if that."

"At the end of the day," he added, "I don't think AOL is putting an equity stake in a company to let it sit there."

The size of AOL's equity stake was not disclosed. AdForce, however, said recent funding totaled $20 million from AOL, Hambrecht & Quist, Attractor Investment Management and others.

EARLIER RELATIONSHIPS GROW

AdForce already had smaller relationships with Netcenter and GeoCities, but will now take over more ad-serving duties for both.

AdForce also recently signed an exclusive agreement to provide service to interactive agency Modem Media-Poppe Tyson, Westport, Conn.

In addition, AdForce today rolls out AdForce for Advertisers, a new version of its service aimed at marketers and ad agencies to plan and control online campaigns.

"We think this is indicative that we have gained a substantial market share," said Chuck Berger, chairman-CEO of AdForce. "Companies like GeoCities and AOL, leaders in the industry, are starting to move from onsite servers to a centralized serving model."

CENTRALIZATION `MAKES SENSE'

AOL, which does central serving for its network, considers this as an investment in the rapidly growing ad-management software business.

"In terms of their business model, it's very difficult for someone involved in content to be good at the software side and good at the advertising sales part," said Myer Berlow, senior VP-interactive marketing for AOL.

AdForce is hoping with these new deals and several more that are pending to become a force in the ad-serving marketplace and challenge competitor DoubleClick's DART, Mr. Berger said. With consolidation across the market, AdForce plans to be one of the two or three companies remaining.